Below is an explanation of some of the cost associated with a real estate transaction. Not all cost(s) below may apply to your sale; however, they are found to be the most common costs in a residential real estate transaction.
Mortgage Pay Off: Before the closing, you will sign a release for the Title Company or Attorney to get the amount that will be owed at the day of closing. This will allow the Closing Company to prepare the closing documents and they will issue a check out of your proceeds at the closing to pay off your outstanding mortgage.
Lines of credit or Equity lines: As with the mortgage pay off, you will have to authorize the closing company to get this information. If there is any amounts owed, they also will be paid off and any lines of credit closed.
Prepayment Penalty: Often, sellers think that all that is owed is the amount showing on their last statement. This is not always true. A prepayment penalty could be in your mortgage. You may also owe interest depending on the day of the month that you close.
Unpaid Taxes/Liens: This is why title work is important prior to closing to see if there are any liens or unpaid taxes on the title. These items will also have to be paid the day of closing. The closing company cuts these checks out of your proceeds and pays them on your behalf.
Special Assessments: Special assessments are things like water, sewer, road or other local government improvements that were assessed to the property. In most cases they must be paid off. In others, they can be assumed by the buyer. If they are to be paid off, again the closing company will pay these out of your proceeds.
HOA / Condo Association / Estoppel Fees: In you live within a required HOA or condo Association there are costs or fees associated with getting a required estoppel. This is a final document from the association showing that you are current and there are no balances owed at closing. This ensures that the new buyer is not inheriting any assessments or balances from you the owner.
Title Insurance: Even though this is a negotiable item, it is customary that the seller pays for this in our local market where that may not be the case in other local markets such as Naples, FL. Title insurance provides a guarantee of ownership of your home. It informs the buyer of the nature of any other interests in the property (liens and encumbrances) and protects the buyer against unknown claims of ownership to or interests in your property. Before a transaction involving a loan or sale of the property is completed, the title company searches appropriate land records to determine ownership, claims, legal documents, and other matters that may affect the property. This search discloses recorded deeds, mortgages, judgments, taxes, liens and other legal matters. The results of the record examination will then be summarized in a preliminary document called a "Commitment for Title Insurance". This document states the status of ownership and enables the lender or purchaser to evaluate the legal status of title to the property before it is acquired. The commitment also constitutes an agreement by the title company to issue a title insurance policy if certain requirements stated in the commitment are satisfied.
Documentary stamps: Documentary stamp tax is levied at the rate of $.70 per $100 on documents that transfer interest in Florida real property, such as General warranty deeds, including quit claim deeds. (The Miami-Dade County rate is $.60 on all documents plus $.45 surtax on documents transferring anything other than a single-family residence). This tax is paid to the local Clerk of Court when the document is recorded. The Clerks of Court send the money to the Department of Revenue and the Department distributes the funds according to law.
Real Estate Commissions: Each real estate office has a set of customary real estate commissions that they charge for there specific office, whether it is a residential,commercial, or vacant lot sale. The commission rate will be something that you discuss or negotiate during the interview or listing appointment with your Realtor®.
